Agenda - Council - 01/24/2023 - Laserfiche WebLink

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Part 3 The proposed project is a 124,146 -square foot (2.85-acre) parcel to be improved with a limited -service, extended -stay lodging facility; the hotel will be associated with a nationally affiliated hotel brand such as Home2 Suites by Hilton. The proposed subject property, which is expected to open on July 1, 2024, will feature 98 rooms. The hotel will also contain the appropriate parking capacity and all necessary back -of - the -house space. The proposed project would offer a pool, free breakfast, laundry facilities, and a fitness center. The owners recently invested in a revision of the plan after hearing from the City of Ramsey of the desire for a "main street" feel along Sunwood Drive. In the family's desire to build community with Ramsey and help develop the next economic opportunities, the owners committed to redesigning their prototype to offer a dual entrance on the North and South of the building, add additional design and windows to the North entrance, and to incorporate more gathering options along the main street for the appeal of the COR's long-term vision of the area. This change created a loss in revenue of 1 room shifting the keys from 99 to 98 and increased the construction and design cost. The family was also advised after meeting with Hilton to relocate to an alternative parcel in order to accommodate and develop a larger hotel to better meet the needs of the growing community and align with Hilton's preferred key count. This change required the family to evaluate a different parcel due to the issue with expansion and parking with the original lot. The family worked with the city to determine an alternative location best suited for the change and aligning with the COR district. Due to the decrease in construction -ready land, this new parcel will required substantial earth work and underground work to accommodate the build. Part 4 Based on the City's request and recommendation to offer a dual entrance to promote the community and guest pedestrian experience and to provide access for future city development and surrounding amenities, we instructed our design team to make multiple changes. We had to increase the lobby square footage by approximately 50%, and we added significantly more glass than the brand requires to give the Sunwood facade a primary entrance. This change created a loss in revenue of 1 room shifting the keys from 99 to 98 and increased the construction and design cost. Additionally, the market study is supportive of a higher percentage of queen/queen rooms which also added additional square footage and cost which we believe will better serve the needs of our community, while simultaneously increasing the potential tax revenue to the city. Conservatively, we increased our cost for the redesign to be approximately $500,000-$600,000. Along with the redesign costs, we have analyzed the shift to the alternative parcel in order to accommodate a larger hotel and we are projected to incur substantially more costs associated with the ground work and earth work in order to move the development forward. Based on these additional unanticipated and additional costs, we are requesting additional support from the City for the land cost as we as site improvements in order to better meet the needs of our community. Our initial bid for the site improvement work is estimated at of $839,500. After discussions with the city, we determined to request an amount of $550,000 of this cost to support the site improvement for the project to commence. Our current rate of return calculation and proforma show the risk and slow ramp up of this project due to the slow market penetration and substantial increase in operations costs and projected inflation. Our forecasts, independently analyzed, show a below average ADR and occupancy rates in comparison to the industry and specifically lower than the brand average.